Key Risk Factors

Introduction

Exploration and mining companies are subject to the regulatory environments in which they operate. This Section identifies the areas the Directors regard as the major risks associated with an investment in the Company. Investors should be aware that an investment in the Company (and its subsidiaries) involves a number of risks, which may be higher than the risks associated with an investment in other companies.

There are general risks associated with investing in any form of business and with investing in the share market generally. There is also a range of specific risks associated with the Company's business and its involvement in the exploration and mining industry. These risk factors are largely beyond the control of the Company and its directors because of the nature of the activities of the Company. The following summary, which is not exhaustive, lists some of the major risk factors, of which potential investors need to be aware.

Summary

Exploration and mining companies throughout the world are subject to the inherent risks of the minerals industry.

The future viability and profitability of the Company as an exploration and mining company will depend on a number of factors, including:

Commodity prices and exchange rates are constantly changing;

Risks inherent in exploration and mining include, among other things, successful exploration and identification of ore reserves, satisfactory performance of mining operations if a mineable deposit is discovered and competent management;

Risks associated with obtaining the grant of any or all of the Company’s mining tenements or permits which are applications, or renewal of tenements upon expiry of their current term, including the grant of subsequent titles where applied for over the same ground.

The grant or refusal of tenements is subject to ministerial discretion and there is no certainty that the tenements applied for will be granted.

Applications are also subject to additional processes and requirements under the Native Title Act. The right to negotiate process under Native Title matters can result in significant delays to the implementation of any project or stall it. Negotiated native title agreements may adversely impact on the economics of projects depending on the nature of any commercial terms agreed.

Risks arising because of the rights of indigenous groups in jurisdictions in which the Company operates which may affect the Company's ability to gain access to prospective exploration areas and to obtain exploration titles and access, and to obtain production titles for mining if exploration is successful. If negotiations for such access are successful, compensation may be necessary in settling indigenous title claims lodged over any of the tenements held or acquired by the Company. The level of impact of these matters will depend, in part, on the location and status of the tenements acquired by the Company;

The risk of material adverse changes in the government policies or legislation of Australia affect the level and practicality of mining and exploration activities;

Environmental management issues with which the Company may be required to comply from time to time. There are very substantive legislative and regulatory regimes with which the Company needs to comply for land access, exploration and mining which can lead to significant delays.

Poor access to exploration areas as a result of remoteness or difficult terrain;

Poor weather conditions over a prolonged period which might adversely affect mining and exploration activities and the timing of earning revenues;

The availability and high cost of quality management, contractors and equipment for exploration, mining, and the corporate and administration functions in the current minerals boom and the cost of identifying, negotiating with and engaging the same; and

The risks associated with being able to negotiate access to land, including by conducting heritage and environmental surveys, to allow for prospecting, exploration and mining, is time and capital consuming and may be over budget and is not guaranteed of success.

Investors should regard the securities of the Company as speculative because of the nature of the Company’s business. The Directors have identified factors that are most likely to affect the Company and the value of its securities, as presented below. However, this is not an exhaustive list and investors should seek professional advice for further clarification of the risks involved before deciding whether to trade in the Company’s securities.